Abe dissolves Parliament and defends his decisions

STANDING FIRM: Mr Abe says calling an election is a legitimate move after his decision to delay the planned sales tax hike

Tokyo

PRIME Minister Shinzo Abe formally dissolved the lower house of Japan's Parliament on Friday, ahead of next month's snap election to which many voters are opposed, and which analysts say could lose his ruling Liberal Democratic Party (LDP) a sizeable chunk of support and seats in the House.

Mr Abe went on the offensive at a briefing last night, saying that calling an election was a legitimate move after his decision to postpone a scheduled sales tax hike.

He also declared that his government would press ahead with reforms to the social security system, and claimed that the fruit of Abenomics would boost the economy and ease the highly strained fiscal situation by the time the delayed tax hike is implemented in April 2017. He also announced that the government would press ahead with controversial reforms to security policies.

Events on the political and economic fronts over the past two weeks have left both Japanese voters and outside observers confused. While the ruling LDP-led coalition is virtually certain of remaining in power because of its huge parliamentary majority, the policy-making process could suffer, analysts say.

These concerns seem not to have been transmitted to the financial markets, which have reacted favourably to Mr Abe's announcement this week of the postponement of the further rise in the national sales tax from October 2015 to April 2017.

Stocks continued to edge up on Friday, despite the shockwaves from the election announcement. The yen reversed course and strengthened sharply from well over 118 to the dollar to 117.63; this was after Finance Minister Taro Aso said that the currency had fallen too rapidly in recent days, which seemed to imply official intervention to stem the fall was coming.

Mr Abe said later, however, that if Japan returned to a period of excessive yen strength, it would lead to job losses and a further hollowing out of manufacturing. He promised measures to help smaller firms cope with the negative impact of a weaker yen, including higher import costs.

Kyodo news service, noting that the LDP and its coalition partner New Komeito were not expected to lose their majority in the lower house, where they held two-thirds of the 480 seats at the time of Parliament's dissolution, said: "There will be 475 seats up for grabs after reforms to rebalance between sparsely populated rural districts and dense urban areas."

Meanwhile, political heavyweight and secretary-general of the main opposition Democratic Party of Japan (DPJ) Yukio Edano has declared that his party was more united than when it was swept from power by the LDP two years ago. He promised a strong showing at the polls.

He acknowledged on Friday that the DPJ had not recovered to a point where it could tell voters to entrust the government to it, but that, with the main opposition party unified behind its leader, Banri Kaeda, it hoped to gain sufficient seats to check the overwhelming power the LDP has enjoyed since 2012.

Analysts say that this could have an impact on the future shape of Abenomics because Mr Abe's LDP favours what Mr Edano called a "top-down" approach to economic reform, which has enabled "the rich to get richer and the strong to get stronger"; the DPJ favours a more egalitarian "bottom-up" approach.

Even Mr Abe has admitted that the LDP cannot hope to retain its current majority in Parliament after the election. Some say that this could stymie his efforts to re-interpret Japan's post-war pacifist Constitution and to give the Self Defence Forces a stronger overseas role.

His attempts to bring back on stream at least some of the 48 nuclear reactors - idled since the March 2011 Fukushima nuclear disaster - could also be frustrated by opposition from the DPJ and other parliamentary forces opposed to nuclear power, analysts say.

Meanwhile, an Asahi Shimbun poll published on Friday found that Mr Abe's support had fallen to 39 per cent - the lowest since he took office in December 2012.

A Kyodo poll published on Thursday found that 63 per cent of voters surveyed did not understand why the Dec 14 snap election was taking place.